South Korea’s industrial output saw its slowest growth in five years in 2025, despite a strong performance in the semiconductor sector. According to government data, industrial output increased by 0.5 percent from the previous year, marking a significant slowdown from the 1.5 percent growth recorded in the prior year. The mining and manufacturing sector, a key component of the economy, experienced a 1.6 percent growth in 2025.
The semiconductor industry notably drove growth, with chip output surging by 13.2 percent year-on-year, reflecting increasing global demand fueled by the artificial intelligence (AI) trend. Retail sales, an important gauge of private spending, also showed improvement, rising by 0.5 percent compared to the previous year. This rebound in retail sales followed a period of decline, signaling a positive shift in private spending trends.
Moreover, facility investment in South Korea increased by 1.7 percent in 2025, marking the second consecutive year of gains. This growth was supported by robust demand for transportation equipment and chip-related machinery. However, construction investment weakened, with construction orders declining by 16.2 percent from the previous year. In December alone, industrial output rose by 1.5 percent month-on-month, driven by strong demand for semiconductors and automobiles.
Retail sales also saw a monthly increase of 0.9 percent in December, driven by higher sales of clothing, food, and beverages. On the other hand, facility investment declined by 3.6 percent in the same month, primarily due to a significant drop of 16.1 percent in transport equipment investments, including ships and aircraft.
